{
THE FOREIGN AFFAIRS COMMITTEE
ix
"research back-up and analytical support" to FCO departments and posts abroad, and main- tains contacts with universities and research institutes. It costs over £2 million per year.' Sir Patrick Wright accepted the need to ensure that the research department worked closely with the FCO operational departments. 2 We note the dominant role of in-house work in the FCO's research effort. We support the use of an integrated in-house Research Department, but we also consider that greater use of outside academic research may prove necessary if extra policy analysis, for example on Eastern Europe and the Soviet Union, is required by the FCO, as we have urged elsewhere. Moreover, while we recognise the problems of the wider dissemination of the FCO's research work, we believe that, where there are no classification barriers, thought should be given to wider marketing of such research material.
The Commonwealth Institute
3
18. As last year, we reviewed progress on the reassesment of the finances of the Common- wealth Institute, which received a grant-in-aid of £2.5 million for 1989-90. Professional consultants are due to report on "the Institutes' commercial revenue-generating capacity, its site development potential. and capital requirements." We look to the FCO to keep us informed of the outcome of the consultants' review and subsequent decisions on the Institute's future.
3. BBC WORLD SERVICE
The Triennium Settlement
19. Funding of the BBC World Service is currently based on the Triennium settlement announced in November 1987, which determined the Grants-in-Aid for the 3 years to March 1991. This was the second Triennium settlement since the new system was begun in 1985. For 1989-90, the World Service is due to receive just over £124 million under Class II, Vote 3 of the Supply Estimates.
20. We examined how the Triennium is operating, and took oral and written evidence from Sir Patrick Wright and other FCO officials; and from Mr John Tusa, Managing Director, BBC World Service, and his colleagues.
21. The Triennium system was, as Sir Patrick Wright reminded us, established at the BBC's request with the aim of enabling them "to plan ahead more efficiently and effectively against an assured level of funding based on a specific FCO Prescription of broadcast output (in terms of languages, hours, and target countries) and on a programme of audibility improvements agreed with the FCO." Both sides agree that the system has worked satisfactorily so far, but now the BBC World Service find themselves squeezed by the prospect of rising inflation, currently running at aproximately 8 per cent. The current year's Grant-in-Aid made allowance for inflation at 5.3 per cent, reduced to 3.8 per cent by an "efficiency" quota. The gap between this allowance and what is needed to cover the BBC pay settlement of 7 per cent is about £2 million, some 4 per cent of the Grant. Pay costs are approximatly 60 per cent of overall costs 8.
6
22. Next year, 1990-91, presents an even bleaker picture for the World Service. They set out their "grave problems" in their memorandum:
IQ 152. 2Q 158.
"The allowance for inflation (under the Triennium] is 5 per cent, which is reduced to 3.5 per cent by the efficiency quota [which] . . . will have to contain both the cost increases in that year and the effect of the extra costs already incurred this year. In addition ... there will be a rent review of Bush House in April 1990 . . . It is clear that rents generally have increased between two and threefold, far beyond anything which was envisaged in 1987, when some allowance was made in the Triennium settlement.
In addition, since then the system of Unified Business Rates has been announced, which will come into effect in 1990-91. It is estimated that this will add some £0.5
3 QQ 159-161.
+ Evidence, p 34.
Evidence, p 69.
"Evidence, pp 64–5.
7 Q 180.
* Q 184.